Nvidia Flexes its Arms

As has long been rumoured and now confirmed after GPU chipmaker Nvidia announced last night that they would pay $40 billion for CPU maker ARM. If the deal goes through, this will be the semiconductor industry's largest-ever deal. Nvidia will pay $23 billion in stock, $12 billion in cash, and then an additional $5 billion if ARM meets certain targets.

The deal now has to get regulatory approval, which could be interesting but should come through. A key reason for the merger is that Nvidia and ARM don't overlap much in their offering. That should also be a good reason for regulators to approve the deal. The deal needs the go-ahead from China, the UK, the EU and the US. - it could take as long as 18-months to come through.

Where it gets interesting is that ARM has supply agreements with most global chip manufacturers, companies who you would consider competitors to Nvidia. How would you feel if your competitor controlled the company providing your key components? Nvidia says they paid a lot of money for ARM, so they have no incentive to do anything that would cause clients to walk away. To show a level of independence, Nvidia has even left the ARM head office in the UK.

ARM's chips are known to be powerful and energy-efficient, making them a key component in mobile technology. It is the ARM based chip that Apple will put in their MacBook Pro going forward, replacing the Intel chips that used to be there. For Nvidia, they seem to be focused on the role that an energy-efficient chip can play in data centres. Over the last year Nvidia has made a big push into data centres, a logical step because their GPU's power most data centres. The purchase of ARM will allow them to supply both GPU and CPU to data centres now.

Read more here - Nvidia Buys SoftBank's Arm in Record $40 Billion Chip Deal